Bitcoin Options Expiry Coming: Will Crypto Market Move This Christmas?

by

As a seasoned researcher who has navigated through numerous crypto market cycles and witnessed the unpredictable nature of Bitcoin, I find the upcoming Bitcoin options expiry to be a significant event that could potentially shape the market dynamics over the next few days. With $14B worth of Bitcoin options expiring on December 27, 2024, it’s hard not to feel a sense of trepidation, given the potential for heavy price swings and volatility.

Over the last few days, Bitcoin’s performance underwent a significant transformation. Notably, it marked its first continuous weekly decline since Trump was elected in the US, lasting an entire week. Despite this downturn, the recent market recovery and the traditional “Christmas Santa rally” in the crypto world have stirred optimism among investors. However, there is growing apprehension due to the upcoming Bitcoin options expiration.

How Would $14B Bitcoin Options Expiry Affect BTC Price?

The price of Bitcoin is trying to rise above its recent decline that took it to $92,000, even though it had reached an all-time high of $108,200 only three days prior. Currently, Bitcoin is being traded at around $93,900, having dropped by 13% over the past week. This could lead to more price fluctuations due to a significant Bitcoin options expiration event scheduled for December 27, 2024.

Based on Deribit’s findings, approximately $14 billion in Bitcoin options are set to expire on the platform, making up 44% of the total Bitcoin options open interest (OI) and marking the largest expiry event in the exchange’s history. Furthermore, half of the Ethereum options, worth around $3.77 billion, will also expire. This significant expiration could potentially lead to increased volatility and dramatic price fluctuations in the crypto market.

The predicted price at which most Bitcoin options will expire, resulting in a significant loss for buyers, is around $84,000. This suggests a substantial decrease from the current prices, as the Bitcoin market is expected to trend towards this level. Given the potential for further price fluctuations, traders should exercise caution over the coming days, as some analysts predict a temporary dip down to $70,000.

Nevertheless, this volatility usually decreases when there’s increasing demand to purchase, as a ‘whale’ steps in to buy during a price drop. This action can significantly contribute to market recovery, but it also leads to considerable fluctuations within the cryptocurrency market overall.

Crypto Market Volatility To Take Over Christmas Santa Rally

Despite the brief period of heightened Bitcoin options volatility, various other elements may continue causing price fluctuations. Some analysts foresee reduced volatility around Christmas, but it might surge beyond that, potentially affecting the traditional “Christmas Santa rally.” As per Arthur Hayes’ prediction, Bitcoin prices are expected to plummet around Donald Trump’s inauguration, which could in turn boost overall crypto market volatility.

However, this is nothing compared to the  Kobeissi Letter reports, which hint at a possible BTC price drop to $20k on the basis of Bitcoin’s tendency to follow the trends of global money supply. The analysts have found a correlation between Bitcoin charts and the global monetary supply but with a 10-week lag. This correlation gets further clear, with the Bitcoin price hitting ATH weeks after the global money supply peaked in October at $108.5. Based on that, BTC might drop to $20K as GMS dropped to months low of $104.4 trillion.

During the ongoing Bitcoin options expiry and the continued consolidation in January, altcoins are likely to experience growth, contributing to the rebound of the overall crypto market. Despite a possible steep decline for altcoins, this dip is expected to be brief due to the increased interest from investors who might shift towards altcoins following a drop in Bitcoin’s price, thereby igniting an “altcoin season.

How To Tackle The Upcoming Bitcoin Volatility?

2024 saw a crowded crypto market where numerous cryptocurrencies promised high returns, but none were more prominent than Bitcoin, which reached an impressive $108.2k. However, its top spot is under pressure due to an upcoming Bitcoin options expiry on December 27, 2024, with around $14B worth of Bitcoin set to expire. This event could lead to substantial market fluctuations that may affect trades. Nevertheless, analysts anticipate these volatilities will settle down promptly, paving the way for future growth. Yet, additional worries are looming on the horizon, particularly in January 2025 when Trump is inaugurated again, as some experts like Arthur Hayes forecast a potential 20-25% price correction for Bitcoin.

Read More

2024-12-24 15:43